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{{navbox}}{{archived|http://endsoftpatents.org/amicus-bilski-2009}}{{brainstorming}}
 +
This page was previously used while drafting the [[FSF]]'s amicus brief to the [[US Supreme Court]] for [[Bilski v. Kappos (2009, USA)]].
 +
 
 +
==The Amicus Curiae==
 +
 
 +
'''(Insert here text being worked on by others: "who are we")'''
 +
 
 +
==Summary of Argument==
 +
 
 +
The amici of this brief argue that software patents are unjust and are causing serious social problems, economic problems, and problems regarding the advancement of technology for society's benefit. Further, the amici argue that patents on software ideas have failed to meet the constitutional justification of "promot[ing] the Progress of Science and useful Arts" and that existing Supreme Court rulings already show clear intent to exclude software from patentable subject matter.  The amici therefore call for a clarification or expansion of the "[[particular machine or transformation]] test" to stop the granting of software patents by the USPTO and to reduce uncertainty for those developing software.
 +
 
 +
'''(Insert here text being worked on by others: "case law")'''
 +
 
 +
==Argument==
 +
 
 +
'''(Insert here text being worked on by others: "case law, continued")'''
 +
 
 +
===For Many Software Developers, the Patent System is Unjust===
 +
 
 +
Development in a domain where ideas are patentable carries risks.  In certain domains, such as the manufacturing of cars and pharmaceuticals, product developers are almost always large companies. Since they have the resources for manufacturing and attaining the necessary government approval for their product, it's reasonable to assume they also have the resources to perform patent searches and to get legal opinions and mount a defence when accused of patent infringement.  Manufacturing these items is inherently expensive, with or without the patent system, so manufacturers can be assumed to be ready to have to expend money.  The expense of the patent system doesn't change who can participate, it just increases the cost.
 +
 
 +
None of this is true for software.  Software is developed by large companies, but also by small companies, project communities, students, and individuals.  Participation in software development has no fundamental need to consume any resource other than your time at a computer.  Thus, it cannot be assumed that developers active in the field of software have the resources to perform patent searches, nor that they expect to incur expenses for their activity. This leaves many developers in a situation where they can't afford to do the legal work to minimise their risk of infringement, and if accused of violating a patent, they can't afford to defend themselves. The system is disproportionately expensive, by orders of magnitude.
 +
 
 +
This inability to participate on an even basis amplifies the problem, but there is also a deeper problem of losing control your computing in your daily life. Because individuals can write software, they can help themselves and solve their own problems. Given that software development includes common activities such as making a webpage, the freedom to use a computer as you see fit for your daily life is fundamental, just as using a pen and paper is.
 +
 
 +
===Compatibility and data format specifications===
 +
 
 +
In software, access to data format specifications is of an importance unparalleled in other fields.  Examples of data that comes in a specific formats include email, images, and word processor documents. For writing an email reader, a word processor, or an image viewer, being blocked from reading, modifying, or writing in the required data format is equivalent to being banned from writing a functional program for that task.
 +
 
 +
This gives too much power to the holder of a patent on a widely used format. In terms of the proper functioning of the software industry, this power is harmful to competition. In terms of individuals, it translates to banning them from writing useful software for themselves and for others.
 +
 
 +
In some fields of development, the barriers made by patents may spurn useful innovation when developers search for a different way to accomplish a patented task. With data formats, this type of innovation is impossible to encourage because by reading or writing the data differently, the software would be failing the objective.
 +
 
 +
Software patents can also hold back freely implementable standards such as those that structure the World Wide Web. HTML version 4 has been the standard for web pages since 1997. Efforts are ongoing to produce its successor, HTML5. This effort is making progress, except concerning which video format to recommend. Due to patents, the popular "MPEG H.264" video format can't be recommended because it can't be implemented without permission. The other option was the patent-free [[Ogg Theora]] format, but when improving the quality of this format was discussed, Chris DiBona of Google said, "here's the challenge: Can theora move forward without
 +
infringing on the other video compression patents?"
 +
 
 +
Yet another way in which compatibility is essential is in the look and control of an application. If I develop an innovative word processor which doesn't resemble any existing word processor, it will be difficult for people to use. Software users have certain expectations. Using new design paradigms can be useful, but it adds initial inconvenience for the users, so this change should only be made if the benefits clearly outweigh the annoyance to users. Having a strange interface because of patent problems is not beneficial for computer users.
 +
 
 +
===A legal mess===
 +
 
 +
One large project has been the subject of two analyses. The Linux kernel -which is the kernel of the widely used GNU+Linux operating system- was examined in 2004 by patent attorney Dan Ravicher who found no court-validated patents infringed by the Linux kernel, but 283 issued patents which could potentially be used to support patent claims against it.
 +
 
 +
  Title: Results of First-Ever Linux Patent Review Announced
 +
  Author: Dan Ravicher
 +
  URL:
 +
http://www.osriskmanagement.com/press_releases/press_release_080204.pdf
 +
  Date: August 2nd 2004
 +
 
 +
Meanwhile, Microsoft has been claiming since 2007 that the Linux kernel violates 235 of its patents - although the patents have never been specified.
 +
 
 +
  Title: Microsoft claims that free software like Linux [...] violates
 +
235 of its patents.
 +
  Author: Roger Parloff (Fortune senior editor)
 +
  URL:
 +
http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/28/100033867/
 +
 
 +
The Linux kernel is just one component of the GNU+Linux operating system. The Linux kernel's human-written source code is publicly available, so we can see that it's made of 4 million lines of source code. With the two above suggestions for the number of patents possibly violated, we end up with a one for every 14,275 lines of code or one for every 17,191 lines of code.
 +
 
 +
Given that complete GNU+Linux operating systems, often distributed with sets of applications, can contain software with more than 225 million lines of source code, we arrive at the possibility of 13,160 or 15,848 patent violations by a complete distribution.  This suggests legal situations which are simply absurd.  This massive uncertainty is what the Supreme Court can end by clearly excluding software ideas on computers from patentability.
 +
 
 +
:Cite: Measuring Libre Software Using Debian 3.1 (Sarge)
 +
:authors: J. Amor-Iglesias, J. González-Barahona, G. Robles-Martínez, and
 +
I. Herráiz-Tabernero
 +
:url: http://www.upgrade-cepis.org/issues/2005/3/up6-3Amor.pdf
 +
:date: June 2005
 +
 
 +
A second example is the previously mentioned MPEG H.264 video format.  This one format is covered by patents from companies including:
 +
 
 +
:"''Owners of patents or patent applications determined by MPEG LA’s patent experts to be essential to the AVC Standard and who have cooperated in the above terms include Columbia University, Electronics and Telecommunications Research Institute of Korea (ETRI), France Télécom, Fujitsu, LG Electronics, Matsushita, Mitsubishi, Microsoft, Motorola, Nokia, Philips, Robert Bosch GmbH, Samsung, Sharp, Sony, Toshiba, and Victor Company of Japan (JVC).''"
 +
 
 +
  Title: MPEG LA Announces Terms of Joint H.264/MPEG-4 AVC Patent License
 +
  URL: http://www.mpegla.com/news/n_03-11-17_avc.html
 +
 
 +
Not only does this show the absurd situation created by granting patents on something as complex and [[software is too abstract|abstract]] as software, but it is also an example of an important standard who's implementation depends on permission from patent holders.
 +
 
 +
In other industries, practitioners may know which companies in their field are applying for patents which might be pertinent.  In software, the number of practitioners is too great for it to be possible to know which companies or groups you should keep an eye on for applications of pertinent  patents
 +
 
 +
===A litany of lawsuits===
 +
 
 +
As researcher Ben Klemens points out, "Any company with a web site could be liable for software patent infringement." The risks of patents on software are not limited to companies that consider themselves software companies.  Klemens noted that among the companies facing litigation for violating software patents included CDW Corp., Motorola, the Green Bay Packers, OfficeMax, Caterpillar, Kraft Foods, ADT Security Services, AutoNation, Florida Crystals Corp., HearUSA, Tire Kingdom, and Boca Raton Resort and Club.  Klemens estimates the cost to the USA of software patents to be $11.26 billion.
 +
 
 +
    Title: The current state of software and business method patents: 2008
 +
edition
 +
    Author: Ben Klemens
 +
    URL:
 +
http://esp.wikidot.com/local--files/2008-state-of-softpatents/feb_08-summary_report.pdf
 +
 
 +
===Leads to overly-broad claims===
 +
 
 +
Because software is a set of instructions to achieve a goal, there is often very little difference between the description of the goal itself and a description of one developer's method of achieving the goal.  This abstract nature of software leads to overly-broad patents which covering many -or all- ways of solving a problem rather than just covering the way the patent applicant solved the problem.
 +
 
 +
===Innovation without patents===
 +
 
 +
Microsoft is an example of a company which was built without patents.  One can question whether their success has been a good thing, but nonetheless, they're an example of development without patents.
 +
 
 +
The patents history of Microsoft was researched by Grace Murray Hopper Award winning software developer Dan Bricklin New York Times journalist Randall Stross who found that In 1987, when Microsoft had only had one patent granted to them, their revenue was $350 million.  By 1990, they had 5 patents and a revenue of $1.18 billion. By 1995, they still had only 77 patents, their revenue was $5.94 billion.
 +
 
 +
(Source: New York Times, ``Why Bill Gates Wants 3,000 New Patents'', July
 +
31, 2005,
 +
http://www.nytimes.com/imagepages/2005/07/30/business/yourmoney/20050731_DIGI_GRAPHIC.html)
 +
 
 +
Thus, when Windows 95 was finished, Microsoft still had only 77 patents.  So the development of this flagship product was sustained by copyright, not patents.  Copyright has brought its own problems, but those problems are more solvable and they don't block independent development as patents do.
 +
 
 +
In 1991, [[Bill Gates]] wrote an internal memo which later published among many other documents as part of a court case. In it he said:
 +
 
 +
<blockquote>
 +
If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today. I feel certain that some large company will patent some obvious thing related to interface, object orientation, algorithm, application extension or other crucial technique. If we assume this company has no need of any of our patents then they have a 17-year right to take as much of our profits as they want.<ref>http://antitrust.slated.org/www.iowaconsumercase.org/011607/0000/PX00738.pdf</ref>
 +
</blockquote>
 +
 
 +
On Feb 10th 2009, Microsoft announced being granted it's 10,000th patent.  Their position in the operating systems and word processor market hasn't changed since 1995.  Since 2006, Microsoft has been approaching distributors of other operating systems and demanding payments of patent royalties.
 +
 
 +
One could deduce that patents didn't help them compete with others, but did help them entrench the position gained.
 +
 
 +
The GNU+Linux operating system is another example of a top class operating system built on copyrights, not patents.  GNU+Linux uses copyright much differently to Microsoft. Before 1995, GNU+Linux was developed by individuals, communities, universities, and those who developed software as a side activity to use for other work.  The license used by the majority of free software, the GNU General Public License, doesn't allow distributors to use patents to require royalties - thus excluding, for example, licensing the MPEG h.264 under its current terms.
 +
 
 +
Source: Analysis by Black Duck of all repositories of free software    says that the GPL (v2, v3, and LGPLv2) accounts for 64% of all free software. And section 7 of gplv2 says: "If, as a consequence of a court judgement or allegation of patent infringement or for any other reason (not limited to patent issues), conditions are imposed on you (whether by court order, agreement or otherwise) that contradict the conditions of this License, they do not excuse you from the conditions of this License. If you cannot distribute so as to satisfy simultaneously your obligations under this License and any other pertinent obligations, then as a consequence you may not distribute the Program at all."
 +
 
 +
===Statements from third-parties===
 +
 
 +
Research and experts cite again and again that software patents are not good for progress, innovation, or the economy. Below is a sample.
 +
 
 +
====From the USA====
 +
 
 +
* James Bessen & Eric Maskin of the Massachusetts Institute of Technology Department of Economics "Sequential Innovation, Patents, And Imitation" (2000):
 +
 
 +
:"''Thus the extension of patent protection to software did not generate a relative increase in R&D spending as predicted by the static model; instead, consistent with the dynamic model, R&D spending seems to have remained roughly steady or to have declined.''"
 +
 
 +
:http://www.researchoninnovation.org/patent.pdf
 +
 
 +
 
 +
* J. Bessen (Boston University - School of law) & R. Hunt (Federal Reserve Bank of Philadelphia), An Empirical Look at Software Patents, 2004
 +
 
 +
:"''The very large increase in software patent propensity over time is not adequately explained by changes in R&D investments, employment of computer programmers, or productivity growth. [...] We find evidence that software patents substitute for R&D at the firm level; they are associated with lower R&D intensity''"
 +
 
 +
:http://papers.ssrn.com/sol3/papers.cfm?abstract_id=461701
 +
 
 +
 
 +
* US Federal Trade Commission, "To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy", October 2003 - http://www.ftc.gov/os/2003/10/innovationrpt.pdf . This was a 315-page review of the whole patent system.  Thirteen pages were given to "The Software and Internet Industries".  We quote the conclusion of this section in full:
 +
 
 +
:"''The software and Internet industries generally are characterized by five factors: (1) innovation occurs on a cumulative basis; (2) capital costs are low, particularly relative to the pharmaceutical, biotechnology and hardware industries; (3) the rate of technological change is rapid, and product life cycles are short; (4) alternative means of fostering innovation exist, including copyright protection and open source software; and (5) the industries have experienced a regime change in terms of the availability of patent protection.''"
 +
 
 +
:"''Panelists consistently stated that competition drives innovation in these industries. Innovation is also fostered by some industry participants’ use of copyright protection or open source software. Several panelists discounted the value of patent disclosures, because the disclosure of a software product’s underlying source code is not required.''"
 +
 
 +
:"''Many panelists and participants expressed the view that software and Internet patents are impeding innovation. They stated that such patents are impairing follow-on incentives, increasing entry barriers, creating uncertainty that harms incentives to invest in innovation, and producing patent thickets. Panelists discussed how defensive patenting increases the complexity of patent thickets and forces companies to divert resources from R&D into obtaining patents. Commentators noted that patent thickets make it more difficult to commercialize new products and raise uncertainty and investment risks. Some panelists also noted that hold-up has become a problem that can result in higher prices being passed along to consumers.''"
 +
 
 +
====From Europe====
 +
* Lord Justice Jacob of the Supreme Court Of Judicature of England and Wales, in his 2006 ruling on the exclusion of "programs for computers" from patentability noted:
 +
 
 +
:"''The patent system is there to provide a research and investment incentive but it has a price. That price (what economists call “transaction costs”) is paid in a host of ways: the costs of patenting, the impediment to competition, the compliance cost of ensuring non-infringement, the cost of uncertainty, litigation costs and so on. There is, so far as we know, no really hard empirical data showing that the liberalisation of what is patentable in the USA has resulted in a greater rate of innovation or investment in the excluded categories. Innovation in computer programs, for instance, proceeded at an immense speed for years before anyone thought of granting patents for them as such. There is evidence, in the shape of the mass of US litigation about the excluded categories, that they have produced much uncertainty. If the encouragement of patenting and of patent litigation as industries in themselves were a purpose of the patent system, then the case for construing the categories narrowly (and indeed for removing them) is made out. But not otherwise.''"
 +
 
 +
:http://www.patent.gov.uk/2006ewcaciv1371.pdf
 +
 
 +
 
 +
* PriceWaterhouseCoopers report for the Dutch Ministry of Economics, ``Rethinking the European ICT Agenda'' (2004):
 +
 
 +
:"''There are particular threats to the European ICT industry such as the current discussion on the patent on software. The mild regime of IP protection in the past has led to a very innovative and competitive software industry with low entry barriers. A software patent, which serves to protect inventions of a non-technical nature, could kill the high innovation rate.''"
 +
 
 +
(Their use of the overly-vague term "IP" is unfortunate since it lumps together many laws which have nothing substantial in common, but the last line does clarify that they're talking about patents on software.)
 +
 
 +
:http://www.ez.nl/dsresource?objectid=62435&type=PDF
 +
 
 +
 
 +
* Gowers Review of Intellectual Property was published after a year-long "independent review into the UK Intellectual Property Framework", conducted at the request of UK government's Chancellor of the Exchequer.
 +
 
 +
:"''The software industry in the USA grew exponentially without pure software patents, suggesting they are not necessary to promote innovation. The evidence suggests software patents are used strategically; that is, to prevent competitors from developing in a similar field, rather than to incentivise innovation.''"
 +
 
 +
(Again, the use of the overly-vague term "Intellectual Property" is unfortunate, but in the review they take the correct approach and deal with patents and each law separately.)
 +
 
 +
:http://www.hm-treasury.gov.uk/d/pbr06_gowers_report_755.pdf
 +
 
 +
 
 +
* Deutsche Bank Research, "Innovation in Germany, Windows of opportunity", 2004
 +
 
 +
:"''Chances are that patents on software, common practice in the US and on the brink of being legalised in Europe, in fact stifle innovation. Europe could still alter course.''"
 +
 
 +
:http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000175949.pdf
 +
 
 +
==Conclusion==
 +
The decision below should be affirmed and clarified or expanded to ensure that no patents are granted for software running on a computer. Beyond that, this Court should recognize and acknowledge how its decisions in Diehr, Parker and Gottschalk have been misapplied in a manner that is no longer acceptable and that patenting software, as such, is inconsistent with the Constitutional mandate.
 +
 
 +
==References==
 +
{{reflist}}
 +
 
 +
 
 +
{{footer}}
 +
[[Category:Bilski]]

Latest revision as of 21:50, 16 June 2012

Red alert.png Archived
This page is no longer used. It was used as a drafting workspace. The resulting document can be found at:
http://endsoftpatents.org/amicus-bilski-2009

Red alert.png This entry is for brainstorming.
These are ideas for a specific purpose. This is not an informational entry and will never turn into one.

This page was previously used while drafting the FSF's amicus brief to the US Supreme Court for Bilski v. Kappos (2009, USA).

The Amicus Curiae

(Insert here text being worked on by others: "who are we")

Summary of Argument

The amici of this brief argue that software patents are unjust and are causing serious social problems, economic problems, and problems regarding the advancement of technology for society's benefit. Further, the amici argue that patents on software ideas have failed to meet the constitutional justification of "promot[ing] the Progress of Science and useful Arts" and that existing Supreme Court rulings already show clear intent to exclude software from patentable subject matter. The amici therefore call for a clarification or expansion of the "particular machine or transformation test" to stop the granting of software patents by the USPTO and to reduce uncertainty for those developing software.

(Insert here text being worked on by others: "case law")

Argument

(Insert here text being worked on by others: "case law, continued")

For Many Software Developers, the Patent System is Unjust

Development in a domain where ideas are patentable carries risks. In certain domains, such as the manufacturing of cars and pharmaceuticals, product developers are almost always large companies. Since they have the resources for manufacturing and attaining the necessary government approval for their product, it's reasonable to assume they also have the resources to perform patent searches and to get legal opinions and mount a defence when accused of patent infringement. Manufacturing these items is inherently expensive, with or without the patent system, so manufacturers can be assumed to be ready to have to expend money. The expense of the patent system doesn't change who can participate, it just increases the cost.

None of this is true for software. Software is developed by large companies, but also by small companies, project communities, students, and individuals. Participation in software development has no fundamental need to consume any resource other than your time at a computer. Thus, it cannot be assumed that developers active in the field of software have the resources to perform patent searches, nor that they expect to incur expenses for their activity. This leaves many developers in a situation where they can't afford to do the legal work to minimise their risk of infringement, and if accused of violating a patent, they can't afford to defend themselves. The system is disproportionately expensive, by orders of magnitude.

This inability to participate on an even basis amplifies the problem, but there is also a deeper problem of losing control your computing in your daily life. Because individuals can write software, they can help themselves and solve their own problems. Given that software development includes common activities such as making a webpage, the freedom to use a computer as you see fit for your daily life is fundamental, just as using a pen and paper is.

Compatibility and data format specifications

In software, access to data format specifications is of an importance unparalleled in other fields. Examples of data that comes in a specific formats include email, images, and word processor documents. For writing an email reader, a word processor, or an image viewer, being blocked from reading, modifying, or writing in the required data format is equivalent to being banned from writing a functional program for that task.

This gives too much power to the holder of a patent on a widely used format. In terms of the proper functioning of the software industry, this power is harmful to competition. In terms of individuals, it translates to banning them from writing useful software for themselves and for others.

In some fields of development, the barriers made by patents may spurn useful innovation when developers search for a different way to accomplish a patented task. With data formats, this type of innovation is impossible to encourage because by reading or writing the data differently, the software would be failing the objective.

Software patents can also hold back freely implementable standards such as those that structure the World Wide Web. HTML version 4 has been the standard for web pages since 1997. Efforts are ongoing to produce its successor, HTML5. This effort is making progress, except concerning which video format to recommend. Due to patents, the popular "MPEG H.264" video format can't be recommended because it can't be implemented without permission. The other option was the patent-free Ogg Theora format, but when improving the quality of this format was discussed, Chris DiBona of Google said, "here's the challenge: Can theora move forward without infringing on the other video compression patents?"

Yet another way in which compatibility is essential is in the look and control of an application. If I develop an innovative word processor which doesn't resemble any existing word processor, it will be difficult for people to use. Software users have certain expectations. Using new design paradigms can be useful, but it adds initial inconvenience for the users, so this change should only be made if the benefits clearly outweigh the annoyance to users. Having a strange interface because of patent problems is not beneficial for computer users.

A legal mess

One large project has been the subject of two analyses. The Linux kernel -which is the kernel of the widely used GNU+Linux operating system- was examined in 2004 by patent attorney Dan Ravicher who found no court-validated patents infringed by the Linux kernel, but 283 issued patents which could potentially be used to support patent claims against it.

  Title: Results of First-Ever Linux Patent Review Announced
  Author: Dan Ravicher
  URL:

http://www.osriskmanagement.com/press_releases/press_release_080204.pdf

  Date: August 2nd 2004

Meanwhile, Microsoft has been claiming since 2007 that the Linux kernel violates 235 of its patents - although the patents have never been specified.

  Title: Microsoft claims that free software like Linux [...] violates

235 of its patents.

  Author: Roger Parloff (Fortune senior editor)
  URL:

http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/28/100033867/

The Linux kernel is just one component of the GNU+Linux operating system. The Linux kernel's human-written source code is publicly available, so we can see that it's made of 4 million lines of source code. With the two above suggestions for the number of patents possibly violated, we end up with a one for every 14,275 lines of code or one for every 17,191 lines of code.

Given that complete GNU+Linux operating systems, often distributed with sets of applications, can contain software with more than 225 million lines of source code, we arrive at the possibility of 13,160 or 15,848 patent violations by a complete distribution. This suggests legal situations which are simply absurd. This massive uncertainty is what the Supreme Court can end by clearly excluding software ideas on computers from patentability.

Cite: Measuring Libre Software Using Debian 3.1 (Sarge)
authors: J. Amor-Iglesias, J. González-Barahona, G. Robles-Martínez, and

I. Herráiz-Tabernero

url: http://www.upgrade-cepis.org/issues/2005/3/up6-3Amor.pdf
date: June 2005

A second example is the previously mentioned MPEG H.264 video format. This one format is covered by patents from companies including:

"Owners of patents or patent applications determined by MPEG LA’s patent experts to be essential to the AVC Standard and who have cooperated in the above terms include Columbia University, Electronics and Telecommunications Research Institute of Korea (ETRI), France Télécom, Fujitsu, LG Electronics, Matsushita, Mitsubishi, Microsoft, Motorola, Nokia, Philips, Robert Bosch GmbH, Samsung, Sharp, Sony, Toshiba, and Victor Company of Japan (JVC)."
  Title:  MPEG LA Announces Terms of Joint H.264/MPEG-4 AVC Patent License
  URL: http://www.mpegla.com/news/n_03-11-17_avc.html

Not only does this show the absurd situation created by granting patents on something as complex and abstract as software, but it is also an example of an important standard who's implementation depends on permission from patent holders.

In other industries, practitioners may know which companies in their field are applying for patents which might be pertinent. In software, the number of practitioners is too great for it to be possible to know which companies or groups you should keep an eye on for applications of pertinent patents

A litany of lawsuits

As researcher Ben Klemens points out, "Any company with a web site could be liable for software patent infringement." The risks of patents on software are not limited to companies that consider themselves software companies. Klemens noted that among the companies facing litigation for violating software patents included CDW Corp., Motorola, the Green Bay Packers, OfficeMax, Caterpillar, Kraft Foods, ADT Security Services, AutoNation, Florida Crystals Corp., HearUSA, Tire Kingdom, and Boca Raton Resort and Club. Klemens estimates the cost to the USA of software patents to be $11.26 billion.

   Title: The current state of software and business method patents: 2008

edition

   Author: Ben Klemens
   URL:

http://esp.wikidot.com/local--files/2008-state-of-softpatents/feb_08-summary_report.pdf

Leads to overly-broad claims

Because software is a set of instructions to achieve a goal, there is often very little difference between the description of the goal itself and a description of one developer's method of achieving the goal. This abstract nature of software leads to overly-broad patents which covering many -or all- ways of solving a problem rather than just covering the way the patent applicant solved the problem.

Innovation without patents

Microsoft is an example of a company which was built without patents. One can question whether their success has been a good thing, but nonetheless, they're an example of development without patents.

The patents history of Microsoft was researched by Grace Murray Hopper Award winning software developer Dan Bricklin New York Times journalist Randall Stross who found that In 1987, when Microsoft had only had one patent granted to them, their revenue was $350 million. By 1990, they had 5 patents and a revenue of $1.18 billion. By 1995, they still had only 77 patents, their revenue was $5.94 billion.

(Source: New York Times, ``Why Bill Gates Wants 3,000 New Patents, July 31, 2005, http://www.nytimes.com/imagepages/2005/07/30/business/yourmoney/20050731_DIGI_GRAPHIC.html)

Thus, when Windows 95 was finished, Microsoft still had only 77 patents. So the development of this flagship product was sustained by copyright, not patents. Copyright has brought its own problems, but those problems are more solvable and they don't block independent development as patents do.

In 1991, Bill Gates wrote an internal memo which later published among many other documents as part of a court case. In it he said:

If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today. I feel certain that some large company will patent some obvious thing related to interface, object orientation, algorithm, application extension or other crucial technique. If we assume this company has no need of any of our patents then they have a 17-year right to take as much of our profits as they want.[1]

On Feb 10th 2009, Microsoft announced being granted it's 10,000th patent. Their position in the operating systems and word processor market hasn't changed since 1995. Since 2006, Microsoft has been approaching distributors of other operating systems and demanding payments of patent royalties.

One could deduce that patents didn't help them compete with others, but did help them entrench the position gained.

The GNU+Linux operating system is another example of a top class operating system built on copyrights, not patents. GNU+Linux uses copyright much differently to Microsoft. Before 1995, GNU+Linux was developed by individuals, communities, universities, and those who developed software as a side activity to use for other work. The license used by the majority of free software, the GNU General Public License, doesn't allow distributors to use patents to require royalties - thus excluding, for example, licensing the MPEG h.264 under its current terms.

Source: Analysis by Black Duck of all repositories of free software says that the GPL (v2, v3, and LGPLv2) accounts for 64% of all free software. And section 7 of gplv2 says: "If, as a consequence of a court judgement or allegation of patent infringement or for any other reason (not limited to patent issues), conditions are imposed on you (whether by court order, agreement or otherwise) that contradict the conditions of this License, they do not excuse you from the conditions of this License. If you cannot distribute so as to satisfy simultaneously your obligations under this License and any other pertinent obligations, then as a consequence you may not distribute the Program at all."

Statements from third-parties

Research and experts cite again and again that software patents are not good for progress, innovation, or the economy. Below is a sample.

From the USA

  • James Bessen & Eric Maskin of the Massachusetts Institute of Technology Department of Economics "Sequential Innovation, Patents, And Imitation" (2000):
"Thus the extension of patent protection to software did not generate a relative increase in R&D spending as predicted by the static model; instead, consistent with the dynamic model, R&D spending seems to have remained roughly steady or to have declined."
http://www.researchoninnovation.org/patent.pdf


  • J. Bessen (Boston University - School of law) & R. Hunt (Federal Reserve Bank of Philadelphia), An Empirical Look at Software Patents, 2004
"The very large increase in software patent propensity over time is not adequately explained by changes in R&D investments, employment of computer programmers, or productivity growth. [...] We find evidence that software patents substitute for R&D at the firm level; they are associated with lower R&D intensity"
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=461701


  • US Federal Trade Commission, "To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy", October 2003 - http://www.ftc.gov/os/2003/10/innovationrpt.pdf . This was a 315-page review of the whole patent system. Thirteen pages were given to "The Software and Internet Industries". We quote the conclusion of this section in full:
"The software and Internet industries generally are characterized by five factors: (1) innovation occurs on a cumulative basis; (2) capital costs are low, particularly relative to the pharmaceutical, biotechnology and hardware industries; (3) the rate of technological change is rapid, and product life cycles are short; (4) alternative means of fostering innovation exist, including copyright protection and open source software; and (5) the industries have experienced a regime change in terms of the availability of patent protection."
"Panelists consistently stated that competition drives innovation in these industries. Innovation is also fostered by some industry participants’ use of copyright protection or open source software. Several panelists discounted the value of patent disclosures, because the disclosure of a software product’s underlying source code is not required."
"Many panelists and participants expressed the view that software and Internet patents are impeding innovation. They stated that such patents are impairing follow-on incentives, increasing entry barriers, creating uncertainty that harms incentives to invest in innovation, and producing patent thickets. Panelists discussed how defensive patenting increases the complexity of patent thickets and forces companies to divert resources from R&D into obtaining patents. Commentators noted that patent thickets make it more difficult to commercialize new products and raise uncertainty and investment risks. Some panelists also noted that hold-up has become a problem that can result in higher prices being passed along to consumers."

From Europe

  • Lord Justice Jacob of the Supreme Court Of Judicature of England and Wales, in his 2006 ruling on the exclusion of "programs for computers" from patentability noted:
"The patent system is there to provide a research and investment incentive but it has a price. That price (what economists call “transaction costs”) is paid in a host of ways: the costs of patenting, the impediment to competition, the compliance cost of ensuring non-infringement, the cost of uncertainty, litigation costs and so on. There is, so far as we know, no really hard empirical data showing that the liberalisation of what is patentable in the USA has resulted in a greater rate of innovation or investment in the excluded categories. Innovation in computer programs, for instance, proceeded at an immense speed for years before anyone thought of granting patents for them as such. There is evidence, in the shape of the mass of US litigation about the excluded categories, that they have produced much uncertainty. If the encouragement of patenting and of patent litigation as industries in themselves were a purpose of the patent system, then the case for construing the categories narrowly (and indeed for removing them) is made out. But not otherwise."
http://www.patent.gov.uk/2006ewcaciv1371.pdf


  • PriceWaterhouseCoopers report for the Dutch Ministry of Economics, ``Rethinking the European ICT Agenda (2004):
"There are particular threats to the European ICT industry such as the current discussion on the patent on software. The mild regime of IP protection in the past has led to a very innovative and competitive software industry with low entry barriers. A software patent, which serves to protect inventions of a non-technical nature, could kill the high innovation rate."

(Their use of the overly-vague term "IP" is unfortunate since it lumps together many laws which have nothing substantial in common, but the last line does clarify that they're talking about patents on software.)

http://www.ez.nl/dsresource?objectid=62435&type=PDF


  • Gowers Review of Intellectual Property was published after a year-long "independent review into the UK Intellectual Property Framework", conducted at the request of UK government's Chancellor of the Exchequer.
"The software industry in the USA grew exponentially without pure software patents, suggesting they are not necessary to promote innovation. The evidence suggests software patents are used strategically; that is, to prevent competitors from developing in a similar field, rather than to incentivise innovation."

(Again, the use of the overly-vague term "Intellectual Property" is unfortunate, but in the review they take the correct approach and deal with patents and each law separately.)

http://www.hm-treasury.gov.uk/d/pbr06_gowers_report_755.pdf


  • Deutsche Bank Research, "Innovation in Germany, Windows of opportunity", 2004
"Chances are that patents on software, common practice in the US and on the brink of being legalised in Europe, in fact stifle innovation. Europe could still alter course."
http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000175949.pdf

Conclusion

The decision below should be affirmed and clarified or expanded to ensure that no patents are granted for software running on a computer. Beyond that, this Court should recognize and acknowledge how its decisions in Diehr, Parker and Gottschalk have been misapplied in a manner that is no longer acceptable and that patenting software, as such, is inconsistent with the Constitutional mandate.

References